As outrage grows over AIG’s decision to give hundreds of millions of dollars in “retention bonuses” to employees (even though some don’t even work there anymore) after receiving more than $170 billion in bailout funds, members of Congress are considering proposals that would levy heavy taxes on the bonuses:
[L]eading Democrats proposed using the tax code to punish executives at the firm, in which the federal government controls an 80 percent stake, unless those payouts are surrendered voluntarily.
Action on the legislation could begin as early as today in the Senate. A proposal from Senate Finance Committee Chairman Max Baucus (D-Mont.) and the panel’s ranking Republican, Charles E. Grassley (Iowa), would levy an excise tax on AIG and the executives who received the payments, adding up to more than 90 percent of the total of the bonuses. That tax would also apply to future bonuses awarded, either by AIG or by other firms receiving federal aid … Democratic lawmakers raced to put their proposals on the table. Reps. Steve Israel (N.Y.) and Tim Ryan (Ohio) introduced the Bailout Bonus Tax Bracket Act to create a 100 percent tax on bonuses over $100,000 that are distributed to employees of financial firms receiving federal bailout money. Rep. John D. Dingell (Mich.) offered a version that would tax such bonuses at a 95 percent rate.
Whether or not that is a good idea is debatable, but Grover Norquist and the anti-tax zealots over at Americans for Tax Reform are not interested in participating in that debate, saying that the bailout should never have happened in the first place and that efforts by the government to recover this money constitute a “secret tax increase” that must be offset by other tax cuts :
“Let’s be clear—the bailout should have never happened, no matter who is benefiting. No more bailout money should be paid. Any monies that are set to go out should be immediately-rescinded,” said ATR President Grover Norquist. “But two wrongs don’t make a right. A tax increase does not ‘make up for’ a bad decision on spending. If politicians decide that taxes need to be raised on AIG executives, they should at least have the decency to cut taxes somewhere else.”
This is taxpayer money that the government is trying to recover, but in Norquist’s myopic worldview, all he can see is a “secret tax increase.”
You have got to hand it to Norquist, as he seems committed to standing by his “no tax increases, ever” principle even when it leads to fundamentally absurd conclusions such as this.
